225 F.3d 974 (8th Cir. 2000), 99-1260, PCS Nitrogen Fertilizer v. Christy Refractories

Docket Nº:99-1260
Citation:225 F.3d 974
Party Name:PCS NITROGEN FERTILIZER, L.P., F/K/A ARCADIAN FERTILIZER, L.P., APPELLEE, v. THE CHRISTY REFRACTORIES, L.L.C., APPELLANT.
Case Date:September 15, 2000
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 974

225 F.3d 974 (8th Cir. 2000)

PCS NITROGEN FERTILIZER, L.P., F/K/A ARCADIAN FERTILIZER, L.P., APPELLEE,

v.

THE CHRISTY REFRACTORIES, L.L.C., APPELLANT.

No. 99-1260

United States Court of Appeals, Eighth Circuit

September 15, 2000

Submitted: December 15, 1999

Appeal from the United States District Court for the District of Nebraska

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Before McMILLIAN, John R. Gibson, and Magill, Circuit Judges.

McMILLIAN, Circuit Judge.

The Christy Refractories, L.L.C. (Christy), appeals from an interlocutory order entered in the United States District Court1 for the District of Nebraska

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holding that the underlying dispute between Christy and PCS Nitrogen Fertilizer, L.P. (PCS), is not subject to mandatory arbitration. See PCS Nitrogen Fertilizer, L.P. v. Christy Refractories, L.L.C., No. 8:98CV390 (D. Neb. Dec. 28, 1998) (hereinafter "slip op."). For reversal, Christy argues that the district court erred in interpreting the pertinent contract documents because (1) Christy's customer acknowledgment was a "definite and seasonable expression of acceptance" and thus bound PCS to its terms, which included a mandatory arbitration clause; (2) the added arbitration term became part of the contract because the clause did not materially alter the contract or, alternatively, because PCS assented to it; (3) Christy's customer acknowledgment was a counter-offer accepted by PCS; or (4) the arbitration clause became part of the contract as a result of the parties' course of dealing. For the reasons discussed below, we affirm the order of the district court.

Jurisdiction

Jurisdiction in the district court was proper based upon 28 U.S.C. § 1332. Jurisdiction in the court of appeals is proper based upon 9 U.S.C. § 16(a)(1) and 28 U.S.C. § 1292(a)(1). The notice of appeal was timely filed pursuant to Fed. R. App. P. 4(a).

Background

The following statement of facts is drawn from the district court order and the record on appeal. PCS, a manufacturer of ammonia fertilizers, is a Delaware limited partnership authorized to do business in Nebraska. PCS has a buying office in LaPlatte, Nebraska, among its several offices nationwide. Christy is a Missouri limited liability company also authorized to conduct business in Nebraska.

On February 4, 1997, through its LaPlatte office, PCS submitted a purchase order to Christy for a certain quantity of a catalyst support medium (hereinafter "the goods") for use in PCS's manufacturing process. See Appellant's Appendix (hereinafter "App.") at 33-36 (PCS purchase order). PCS's purchase order contained no term regarding the arbitration of disputes. See id. In response, on February 7, 1997, Christy sent a customer acknowledgment form. See id. at 37-38 (Christy customer acknowledgment). The face of Christy's form contained the statement: "THIS CONTRACT CONSISTS OF THE TERMS AND CONDITIONS ON THE FACE AND REVERSE HEREOF. THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES." Id. at 37 (set forth in capital letters in original). The terms and conditions of sale were set forth on the reverse side of the form and included the following initial term:

1. Offer and Acceptance . . . . Seller's acceptance of any offer by Purchaser to purchase the Products is expressly conditional upon the Purchaser's assent to all the terms and conditions herein, including any terms additional to or different from those contained in the offer to purchase. Seller hereby objects to any different or additional terms or conditions contained in any acceptance by Purchaser of any offer made by Seller or in any other document submitted by Purchaser. No modification, addition, deletion, rescission or waiver by Seller of any term or condition set forth herein or of any of Seller's rights or remedies hereunder shall be binding upon Seller unless agreed to in a writing signed by Seller. Purchaser shall be deemed to have assented to these terms and conditions unless Seller receives written notice of any objection within 10 days after Purchaser's receipt of this form and in all events prior to delivery or other performance by Seller.

Id. at 38. Another term on the reverse side of Christy's form provided for arbitration of contractual disputes between PCS and Christy as follows:

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26. Arbitration. If any dispute occurs between Purchaser and Seller arising out of or related to this Contract, Seller, in its sole discretion, may require that such dispute be settled by arbitration under the then current rules of the American Arbitration Association. If Seller elects to submit any such dispute to arbitration, the decision and award of the arbitrator shall be firm and binding and the award may be entered in any court having jurisdiction. Any arbitration shall be held and the award shall be deemed to be made in St. Louis, Missouri.

Id. Finally, the last sentence on the terms and conditions page of the form stated that "THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES." Id. (set forth in capital letters in original).

On or about May 1, 1997, Christy delivered the goods to PCS's LaPlatte office. See id. at 32 (affidavit of Gary Altman) (Sept. 25, 1998). PCS alleges that, following use in its manufacturing process, the goods failed to function as warranted. See id. at 2-3 (Amended Complaint, ¶¶ 10). PCS subsequently commenced this action against Christy in the United States District Court for the District of Nebraska and claimed damages of $940,876.36 for the cost of the goods, lost production, and the clean-up and repair costs associated with the damage that the goods allegedly caused to PCS's manufacturing equipment.

On September 4, 1998, Christy filed a Demand for Arbitration with the American Arbitration Association ("AAA") and attached a copy of PCS's purchase order and Christy's customer acknowledgment form. See id. at 41-49. On September 25, 1998, PCS formally objected to Christy's demand for arbitration and requested a stay of arbitration. See id. at 53-54. On the same day, PCS asked the district court to decide whether PCS was required to arbitrate its claims against Christy and to enjoin arbitration pending the district court's arbitrability determination. See id. at 13-14 (Motion to Enjoin Arbitration), 19-20 (Motion for Determination of Arbitrability).

The district...

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